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What makes a meaningful impact report?

December 7, 2023

The new Impact Performance Reporting Norms, published for consultation last month by Impact Frontiers, signal an important milestone for the impact investing industry – providing much needed guidance as to what useful impact reports should include, as well as a structure for organizing the content therein.

Which is good timing, as the demand for reports that can be used to effectively gauge impact performance have become more pronounced.  Impact investing skeptics are hungry to know if this fast-growing industry is living up to the hype. Those on the inside–practitioners, investors, and their beneficiaries–seek guidance to more credibly show the results of their work.

Many of the recommendations outlined in the Norms build on research BlueMark previously conducted to better understand the key information required to interpret and draw conclusions about impact performance. Our research surfaced the need for several distinct types of information, including:

  •  Information about an investor’s impact thesis and objectives
  •  A combination of qualitative and quantitative results data that is relevant to the thesis and presented in relative terms (i.e in relation to a baseline, prior result, and/or external threshold)
  • Transparency into risks, negative impacts, and lessons learned
  • Clearly cited data definitions, sources, and assumptions

These concepts (among others) are accounted for in the Norms and accompanied by detailed guidance as to how report preparers should organize and structure this information.

At the same time, the Norms are flexible, allowing different types of impact investors to apply them in the context of their specific strategies and goals. While this flexibility may be vexing for those seeking more uniform and templatized impact reporting, it is precisely the approach needed as practitioners begin to disclose this rich mosaic of data more consistently. It is certain, as the Norms are tested and adopted, that more structured and prescriptive reporting templates will emerge. But, in their current form, the Norms offer fertile ground for practitioners to experiment and work out how best to disclose their impact data across a common set of information categories. 

The Norms also recognize the critical role that external reviewers play in strengthening the credibility and usability of impact reports. They are supplemented by a set of key questions and tests that independent parties should use when developing opinions or conclusions about the quality of an impact report and its alignment with the Norms.  As our market matures and as independent verification of impact reports becomes more commonplace, ensuring consistency in the rigor underpinning the interpretation and validation provided by third parties will be essential.

We strongly encourage investors to pilot the Norms and openly share their experiences with others in the market. Together, we can all work to deepen our understanding of impact performance, and hopefully, show the skeptics that the delta between what impact investors are claiming and creating is smaller than they think.